Worldwide PC volume shipments declined for the fourth consecutive year last year, with desktop PCs faring even worse than notebooks. As a result, some global PC brands have exited the market. In response, Getac Technology Corporation took a bold step to increase its focus on the rugged computing market, which it entered into in 2006. Now Getac ranks as a top three global rugged computer brand. The company has been able to achieve impressive performance and profitability, as evidenced by its three years of consecutive growth since 2013. In the company's 2015 annual report, it was reported that the company's earnings reached a six-year peak. Getac has clearly outperformed the rugged computer market and maintained goodwill among its customers while the PC industry still suffers a slow recovery from past economic downturns. The impressive performance can be attributed to long-term efforts in areas such as supply-chain management, global logistics improvement, vertically integrated manufacturing services, as well as good corporate governance.
James Hwang, who has served as Getac's Chairman for more than five years, recently spoke about the company's undergoing a major transformation, Apart from its rugged computer business focus, Getac has taken a vertical integration strategy to acquire light metal and plastic injection mechanical production companies, broadening its customer bases from consumer electronics to the automobile market. The rise of IoT and cloud applications also has made Getac shift from selling hardware parts to providing solution-oriented products due to growing customer demand for integrated hardware and software solutions. Customers want solutions that are ready to go with good services, Hwang highlighted; it is this momentum that has driven Getac to become a more solutions-centric company, while keeping pace with regulatory changes.
Transparent corporate governance and Vietnam operations for manufacturing automotive parts boosting profits and revenues
Hwang indicated, when a business is in a critical state, it must follow the market trend, and it may take dramatic changes to win the game. In 2008, due to a slower recovery of a widespread global economy downturn and uncertainty in the PC market caused by steadily falling retail prices and profit margins, Getac saw that its profits were shrinking. The company quickly identified uncompetitive businesses, and transformed its business focus to value-added niche market products while continuing to enhance its core technologies and capabilities. During this business transformation, Getac handled the change with clear and transparent corporate governance.
From 2010 through 2012, Getac restored competitiveness by slimming down its Shunde production operations in Foshan, China. This was because of the unclear future of the gaming and desktop PC sectors. This experience was a good example of how Getac's focus on transparent corporate governance affected its negotiations with workers and local government. During the downsizing process, Getac negotiated with workers and the local government in accordance with best practices of labor law and corporate governance and found a balance between the demands of labor and the needs of the company. Hwang is proud to emphasize the importance of transparent corporate governance. At that time, he spoke openly and frequently to discuss the company's future development plans with employees. This helped all parties understand the company's goals, principles, mechanisms, functions and business strategies.
In addition, Getac also spotted business opportunities in Vietnam. Hwang noted that the launch of the Getac Vietnam production site was considered another big milestone for Getac. This reflects the truth of rising wages and higher operation costs at China manufacturing sites. According to a Japan External Trade Organization survey report, the average monthly wage for workers in China is US$424. It is three times higher than that of Vietnam workers and over four times the rate for India. This is why Getac decided to invest Vietnam in the early stage.
The Getac Vietnam production site was not only an investment in a cheaper labor strategy but also a strengthening of the company's leading-edge industrial automation and technology. Getac implemented highly sophisticated and high precision processes into its Vietnam facilities and ramped up both the production capacity and quality standards. The success of the Vietnam investment showed the company's corporate commitments and values. Most of all, the results gained the trust of customers. Hwang proudly indicated that by leveraging the Vietnam operation, Getac has become the biggest automotive seat belt spindle manufacturer in the world.
Increasing brand value and setting strategic partnerships with global giants
Compared with well-known consumer brands, there are many industrial brands emerging as leaders in Taiwan. Popular examples are various Taiwan brands in the semiconductor or industrial PC sectors. Hwang expected to push Getac as a global industrial brand of rugged PCs. Getac is presenting a brand new business model to build a direct link from manufacturing to services for end customers with the core strength of integrating the supply chain, manufacturing and logistics. This covers various scopes of products from pre-sales to after-sales stages to providing deeper and wider service channels and ecosystems. To ensure strong customer service and fulfill the related demand requirements is the key to satisfying global customers. And it is the way to build a long term relationship and win the trust of customers, Hwang believes.
For example, Getac recently established customized solutions to provide after-service repair and maintenance services for one major automobile manufacturer in Germany. The German automobile industry is regarded as the most competitive and innovative in the world. The major challenge for Getac was to build a logistics system to support automobile makers at nearly two hundred service shops worldwide, despite having some of the locations being very remote and difficult to get consistent transportation service. And it is important to ensure system reliability once implemented. In this project, Getac provided advanced predictive analytic technology to predict the time of system errors and abnormal conditions. This was a very good experience for Getac to introduce a business model that characteristically delivers value to provide customer-oriented solutions. Namely, the company understood that success did not simply come from providing a product but by providing full global support as well, across multiple time zones and languages. This complete global support network has enhanced the company's ability to transition from a hardware company to a complete solution provider. To achieve these goals, Getac has invested enormous resources to prepare and enable the entire organization to delivering complete customer satisfaction. This is what Hwang called the procedure of "making friends" with global leaders.
Getac has transitioned into a service-oriented business model which has changed the way it has traditionally conducted business. For example, its sales team was very familiar with a hardware-centric business in the past when it worked with global telecoms. The new business model has stimulated Getac to develop logistics and after-service systems to satisfy global brands by providing both value-added products and a global presence to do the services. This is all based on the company's strong engineering capabilities and its strategic partnership with global leaders. Getac has benefited from these strategies and gained market share in the rugged PC market, bringing greater scale to Getac's business opportunities.
Hwang highlighted that the Getac brand delivers value to customers through the core advantage of technology ability mixed with business flexibility. The most important thing is solving problems for customers. He is pushing this concept to the entire organization by increasing the resources to upgrade the company's services and creating the power of innovation.
Developing the VERETOS cloud platform is vital for Getac's goal to become a major solution provider
Hwang continued to speak about the Getac strategies of targeting emerging cloud technologies, as well as the Internet of Things (IoT) and big data analytics. Hwang cited the company's investment in its VERETOS digital mobile surveillance system as another example of how Getac is extending its reach as a service-oriented business.
VERETOS is a dedicated cloud-based system for assisting police and law enforcement units by tracking and recording video streams from duty officers and managing the related evidence through a cloud service. The huge amount of streaming data is analyzed by the technology using Big Data Analytics and then processed using artificial intelligence in order to help it identify and manage potential police actions. This solution has been deployed by several US police departments. Getac business teams are planning to introduce the VERETOS system to the European market as well, to take advantage of the market potential both for policing and public security business categories.
The VERETOS system is equipped with SaaS (Software as a service) capabilities tightly bounded to the cloud and IoT technologies dedicated for fulfilling police requirements. When Getac introduced the VERETOS system, the US law enforcement sector saw great potential in the solution. Government projects have long-been a major contributor to rugged PC shipments for Getac. Targeting the strong demand in public security and safety markets, VERETOS will also accelerate demand growth for rugged computers and peripherals.
Taiwan's ICT industry is characterized by local industrial clustering of PC components and modules, and this is often cited as the reason for its success. But the mindset of a hardware manufacturer must now shift to a strategy that is more solutions centric and service oriented. Leveraging SaaS technologies, the VERETOS system empowers Getac to do a better job in delivering solutions and services, which are areas where the company has invested the most. Hwang has strongly positioned Getac to become a leading solution provider with support from Taiwan ICT industry partners.
Getac Chairman James Hwang talks about the company's transformation into a solution provider